How Furlough Will Work In 2021

When the UK Chancellor Rishi Sunak first announced emergency measures to help those financially affected by coronavirus, he said the government was there "to support millions of Brits who have been furloughed." After the UK’s second lockdown, companies and brands are still trying to cope with the economic damage caused by the pandemic. The furlough scheme will now be extended until the end of April 2021 while tougher measurements are put in place across the UK. But what does furlough mean and what are you entitled to in the latest extension of the Coronavirus Job Retention Scheme?

What does furlough mean?

Furloughed workers are those who have been asked to stop working, but who have not been made redundant. Essentially, it is used by employers as an alternative to laying off staff; they remain on the payroll, but they are asked to take a leave of absence for a certain amount of time.

Previous to the coronavirus pandemic, it was very rare for a UK employer to furlough staff, and the process would vary company to company. Remuneration could take a number of different forms depending on the employer's financial circumstances.

Set out by the government to support employers whose operations have been severely affected by coronavirus (COVID-19), The Coronavirus Job Retention Scheme is open to all UK employers “small or large, charitable or non-profit, are eligible for the extended Job Retention Scheme”, the government says. When first introduced, the scheme was intended to be available until June 1, 2020, but on May 12, Sunak extended the job retention scheme until October 2020. Then on October 31, the prime minister extended The Coronavirus Job Retention Scheme for a month, and on November 5, the chancellor announced the furlough scheme had been extended until the end of March 2021. The latest update, however, announced by Sunak on Dec. 17, means that the scheme has been extended to April 2021. Initially due to be reassessed in January 2021, the review of the employer contribution element of the furlough scheme has now been brought forward.

Chancellor Rishi Sunak said of the extension: “Our package of support for businesses and workers continues to be one of the most generous and effective in the world – helping our economy to recover and protecting livelihoods across the country.”

Employees will have the option to bring furloughed employees back to work part-time or furlough them full time.

Will I still be paid if I am furloughed?

Under The Coronavirus Job Retention Scheme, UK employers can claim 80% of furloughed employees’ usual monthly wages, up to £2,500 a month, plus the associated employer National Insurance contributions and minimum automatic enrolment pension contributions. For the latest extension to the furlough scheme the government will continue to pay up to 80% of the salary of employees for hours not worked until the end of April, with a cap of £2,500 a month.

If you have been told you are on furlough, you do not have to contact the Treasury yourself: it is your employer’s responsibility to organise payment. Any UK organisation with employees can apply, including businesses, charities, recruitment agencies (agency workers paid through PAYE) and public authorities.

If you’ve been employed for over a year, employers will calculate your monthly earnings based on the higher of either the amount you earned in the same month last year, or an average of your monthly earnings from the last year.

What happens to the rest of my salary?

Your employer is not legally required to pay out the remaining 20% of your salary, though they can if they choose to.

Unfortunately, any bonuses, commissions and fees will not be taken into consideration as part of your monthly earnings.

How do I know if I’m on furlough?

Your employer will need to notify you before putting you on furlough and should discuss any changes to your employment contract with you and make them by written agreement. When employers are making these decisions, equality and discrimination laws will apply in the usual way and your rights as an employee will not be affected by being on furlough, including redundancy rights.

Once you are on furlough you will not be able to work for your employer, but you are able to take part in volunteer work or training, as long as you’re not making money for, or providing services to, your employer.

If workers are required to, for example, complete online training courses while they are furloughed, then they must be paid at least the National Living Wage/National Minimum Wage for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

If you have been placed on furlough, you will need to remain on furlough for a minimum of three weeks. You can also be placed on furlough more than once, and furlough periods can be successive from the previous without a break while the scheme is open.

Who is eligible for furlough?

Employees placed on furlough must have been on the company PAYE payroll on 30 October 2020, and can be on any type of contract, including full- and part-time employees, employees on agency contracts, and employees on flexible or zero-hour contracts.

After some initial confusion about whether the funding would be available in other parts of the UK at different stages later on, if they were to go into additional lockdowns of their own for example, the latest extension from the Chancellor will include Scotland, Wales and Northern Ireland in the “UK-wide scheme.”

Self-employed workers and contractors have also been offered an emergency support package, too. This has been extended until April 21 to offer a fourth grant covering February to April 2021, but how much the grant will be worth is unclear.

In September, the government announced the extension of the Self-Employed Income Support Scheme (SEISS) with an additional two grants for November 2020 to April 2021, and in November announced that the third SEISS grant, covering the period 1 November 2020 to 31 January 2021, would be a single payment of 80% of trading profits, up to a maximum of £7,500, to cover the November lockdown. This was an increase from the 70% of profits for the second grant under SEISS covering August to 31 October (up to a cap of £6.570).

Freelancers and self-employed workers can still apply for the scheme’s third grant until January 29, 2021, and a fourth grant will be open for applications at a later date. The Government website states: “We will set out further details, including the level of the fourth grant in due course.”

Per the government website, the amount the February-April round will cover will be determined in due course. You can find out if you're eligible for the SEISS here, if you were eligible for the initial two rounds of support you will remain eligible for the second two.

Do I have to go on furlough?

As The Coronavirus Job Retention Scheme is in place to limit redundancies during the COVID-19 pandemic, refusing to be furloughed may put you at risk of losing your job. However, employees must be consulted and agree to be furloughed as it is a change to the terms and conditions of their employment, and therefore still subject to existing employment law. Remember though, any terminations to employment contracts must be in line with normal redundancy rules and protections.

Contributions from Orla Pentelow, Sam Ramsden, and Niellah Arboine.